AAIS continues to advance initiatives that support Member success through enhanced engagement, regulatory transparency, and product innovation. Our June 2026 Progress Report highlights the addition of Russ McGuire as Chief Member Engagement Officer, the launch of the new AAIS Legislative Summary Tracker, and ongoing progress across key product initiatives, including the 2026 Farmowners Series, 2027 Homeowners Series, FLAMES, Personal Flood Insurance Program, and multiple commercial lines and inland marine refresh efforts. The report also covers continued expansion of implementation resources through the S2M Toolkit, advancements in DOI-approved rating innovation with Pinpoint Predictive, and the latest developments in emerging risk areas such as PFAS and microplastics.

Together, these updates reflect AAIS’s ongoing commitment to providing Members with the tools, insights, and solutions needed to navigate an evolving regulatory and insurance landscape.

The post AAIS Progress Report: June 2026 Edition first appeared on AAIS.

AAIS continues to make meaningful progress across our product lines, regulatory activity, and organizational leadership. Our March 2026 Progress Report highlights the appointment of our new President and CEO, Keith Wolfe, ongoing advancements across personal and commercial lines, continued expansion of our Personal Flood Insurance Program, and filings underway across multiple initiatives. The report also covers emerging industry considerations, including PFAS and microplastics, along with enhancements to coverage forms and continued innovation in rating and implementation support with our S2M Toolkit.

Together, these updates reflect our ongoing commitment to delivering modern, compliant, and market-responsive solutions that support Members in a rapidly evolving P&C landscape.

The post AAIS Progress Report: March 2026 Edition first appeared on AAIS.

AAIS continues to evolve with our Members at the center of everything we do—strengthening our products, deepening relationships, and advancing the resources that support success in a changing market. Our December AAIS Progress Report highlights key advancements from the past several months, including important organizational updates, new product leadership, and meaningful milestones across our personal and commercial lines portfolios. Inside the report, Members will find updates on rating innovation and regulatory approvals, enhancements to homeowners, farmowners, flood, inland marine, and commercial liability programs, as well as market-driven endorsements and refreshed coverage forms. Together, these initiatives reflect our ongoing commitment to delivering modern, compliant, and market-responsive solutions that support long-term growth and stability.

The post AAIS Progress Report: December 2025 Edition first appeared on AAIS.

At AAIS, our Members are at the center of everything we do, and supporting your success remains our top priority. The September AAIS Progress Report provides a forward-looking view of the initiatives shaping our product roadmap and organizational focus—highlighting not only what’s making an impact today, but what’s in development and coming next. This edition includes key updates across personal and commercial lines, rating innovation and regulatory filings, strategic organizational enhancements, and expanded coverage solutions designed to help Members respond to evolving market demands. Together, these updates reflect how we continue to listen, respond, and innovate to deliver practical, market-ready solutions that move your business forward.

The post AAIS Progress Report: September 2025 Edition first appeared on AAIS.

Defining Speed to Market

White defined “speed to market” as an insurer’s ability to introduce new products or services or make updates to products that already exist as quickly and efficiently as possible. Speed to market covers the entire product development lifecycle, beginning with product ideation, regulatory approvals, marketing and distribution, and finally, the ever-important need to deliver on customer engagement. “GhostDraft finds it critical for our customers and carriers to be first to market with product innovation by making sure that those products address emerging customer needs, especially when you look at the overriding context of being in a fast-paced environment and the need to have a significant competitive advantage,” White shared. “So, we work with insurers so that they can quickly adapt to those changing demands, but also position themselves to retain existing [customers] and attract new customers.” He clarified that speed to market is a continuous journey. “We like to work with our customers to ensure that they’re fostering an innovative culture, making sure that they can easily collaborate around their organizations, and continuously improving, adapting, and evolving so that they can stay ahead of the competition,” he said.

Speed to Market Challenges

One challenge White has noticed with carriers achieving speed to market is the use of legacy systems and legacy processes. “The ability to be adaptive and to try and integrate new and responsive technologies within those legacy environments is pretty important,” said White. “But it can be very complex and time-consuming.”

There are also challenges with streamlining the different processes that relate to collaboration within the product and product development environment. “There are lots of stakeholders involved when you think about how an insurance product is created and moved through its lifecycle,” White stated. “The ability to accurately and effectively collaborate and communicate amongst all of the different departments within a carrier organization is a really critical part of the process.”

In addition, White has seen a lot of organizations struggling to remain compliant with regulators. “We have so many new requirements that are being established within the customer base and the policyholder base, which makes things more complicated and makes remaining compliant a little tougher,” White explained. He touched upon competitive pressures being a challenge to carriers as well. “Once you realize that somebody else has put something into market and you decide it’s a business that you want to be in, you’ve got to compete both with those traditional competitors and the big increase in insurtech startups that we’re seeing in the marketplace today,” he said.

Balancing Speed and Compliance in Product Development

White acknowledged that speed is essential, but compliance is equally, if not more, critical. “There is no sense implementing the fastest technology if you can’t ensure that you can remain compliant,” he advised. “That means reviewing and updating processes that exist to ensure that you’re aligning the processes with new and emerging regulations that are coming from the industry.” To be able to quickly adapt and make changes rapidly, White suggested standardizing. “If you are standardizing, for example, with an AAIS product group, then that means you can take some of those decision points out of your processes,” he explained. “If you leverage something that’s already compliant, then all you’ve got to do after that is ensure that you’re staying on top of it and continuing to meet all of the different obligations you have from a compliance and a regulatory perspective.”

How GhostDraft Helps Drive Speed to Market

GhostDraft offers a few unique ways to drive speed to market. One way is what White refers to as “unburdening.” “We’re taking the burden away by making all of the changes that are required to remain compliant and remain consistent and remain competitive,” he shared. “I had a customer who, essentially, after implementing our solution, was able to move from the design phase to the development phase and through to the production process in just a couple of days, which would historically have taken them about three months to do.”

GhostDraft also utilizes migration to address speed to market. “We certainly see the inclusion of AI when it comes to being able to migrate a large body of content from one environment to another body of content,” White began. “At GhostDraft, we call it our document domain model. All of the data reference points and all of the business logic that is required to produce this form live in one area within the platform that’s managed and owned by businesspeople.”

A significant amount of data mapping needs to happen with a library of documents, according to White, and GhostDraft can help with managing that. GhostDraft allows a carrier to develop those documents only once while having the ability to move the entire domain to a new administrative system without changing any of the business rules or logic that is employed to generate that form.

To view the full webinar, click on the video above.

Questions? Please reach out to any of the featured speakers through the contact information below.

Laurence White

Executive Vice President of Sales – GhostDraft

laurence.white@ghostdraft.com

The post Webinar: From Concept to Customer: The Need for Speed to Market in Insurance first appeared on AAIS.

Following the success of this model, several fire departments across North America began to develop similar mitigation strategies that were focused, coordinated, and ultimately effective in reducing fire and other emergency incidents in their communities. Surrey Fire Service in British Columbia, Canada used similar principles to reduce fire incidents by 80% in a 12-year period[iii], and Kankakee Fire Department in Illinois reduced fires in their focus area by 40% over several years[iv]. So, it raises the question, why doesn’t every local fire department embrace CRR if it promises such significant potential reductions in losses?

Have We Created a Moral Hazard by Incentivizing the Wrong Things?

A large part of the answer to that question rests in the fact that most of what we measure, and thus incentivize fire departments to focus on, tends to be response oriented. What has been missing from this equation for far too long is any meaningful evaluation of how good of a job our communities and the fire departments that protect them are doing in terms of reducing risk, not just responding to it. Frankly, it is far easier for fire departments to largely ignore proactive risk mitigation strategies and take a more reactive suppression-focused approach. Doing “the right thing” in terms of executing effective CRR programs takes time, effort, passion, and money.

There is little if any incentive for fire departments to take this CRR paradigm shift seriously. To put it in more stark terms, we have created a Moral Hazard where we inadvertently reward all of the wrong things, and thus we should not be surprised that CRR efforts are given short shrift. So, to answer the question of “Why don’t more fire departments embrace CRR?”, it is because the way we grade and evaluate fire departments doesn’t meaningfully evaluate CRR. For CRR to become more than just the “right thing to do,” we need to put CRR front and center in how we evaluate public fire protection…and that’s exactly what AAIS is doing.

AAIS’s Role: FLAMES

Each community is different, faces different risks, and needs different interventions. Yet, it is challenging to develop a standardized and consistent way to objectively measure how well a community is doing in terms of understanding its various risks, developing meaningful strategies to reduce those risks, and measuring the effectiveness of their efforts, at scale. AAIS has developed a novel approach to rating modern public fire protection called FLAMES (Fire Loss and Mitigation Evaluation Score). FLAMES challenges the legacy assumptions that limit modern insurers’ ability to accurately select and price risk by turning the focus from counting response equipment to evaluating mitigation effectiveness.

Building upon this existing filed approach, AAIS is expanding and enhancing its fire loss model countrywide to give insurers a more granular and accurate understanding of fire losses. AAIS is also developing an innovative methodology for evaluating local mitigation efforts where they are the most effective: at the local level. This approach will provide insurers and communities with important insights about the effectiveness of local mitigation programs and services in a market constantly disrupted by ever-increasing losses.

To learn more about what’s to come with the FLAMES initiative, visit AAISonline.com or contact an AAIS Engagement Manager.

[i] British fire services classify fires as either primary fires, the most severe, or secondary fires, which pose less immediate risk to life or property. They also break out dwellings fires out of the wider statistics about primary fires. These statistics were compiled from data publicized by the British Home Office.

[ii] NFPA annually compiles national fire loss estimates.

[iii] The Surrey Fire Service – HomeSafe program has been evaluated to determine the efficacy of the program.

[iv] The American Red Cross conducted an evaluation of its smoke alarm installation program partnership with the Kankakee Fire Department.

The post Community Risk Reduction: A Paradigm Changing Public Fire Protection first appeared on AAIS.

While much of the talk about batteries and fires in the popular press circles around electric vehicles (EVs), the focus of this workshop and the crux of the battery fire problem in New York City (NYC) is focused on micro-mobility devices: eBikes, eScooters, eMotorcycles, and to a lesser extent, hoverboards and novelty mobility devices. Micro-mobility devices are a particularly urban phenomenon that is especially well suited for dense urban, post-pandemic communities. These battery-powered devices need regular battery swaps or charges wherever they can get access to electricity– be it the back of delivery hubs, e-bike stores, restaurants, retail shops, apartments, and most worryingly, egress hallways. When these devices fail—and fail catastrophically— the rapid heat release rate has been shown over and over to lead to extreme fire behavior often blocking egress pathways, and with occasionally fatal results.

A recent fire in NYC highlighted key themes that emerged throughout the workshop. In June 2023, an e-bike retail store in the Lower East Side of Manhattan had a significant fire from a battery that likely was being charged killed four residents in the apartments above the shop. In the 10 or so days after the original incident, there were numerous reignitions including a second major incident that nearly took the life of a police officer. This incident only got worse when the ill-equipped hazardous materials remediation contractor ended up having several additional fires first in a containment barrel in front of the fire building, then in a semi-truck in the middle of the Long Island Expressway, and later in a storage yard. While you’d be forgiven for assuming this was the plot of a Hollywood dramatic comedy, this sequence of events highlights the potential for compounding problems when these batteries are poorly understood and poorly handled. It brought to light three themes:

1. The first fire may lead to more. Firefighters pride themselves on making sure a fire is truly extinguished before they leave. The “overhaul”’ practice, where they seem to destructively remove drywall and pull-down ceilings, is intended to ensure that there are no hidden pockets of fire that might rekindle hours later. However, battery fires, for all intents and purposes, may be extinguished, and then due to stranded energy or a compromised container, the battery may reignite hours, days, or even weeks later. Even batteries that were not directly involved in the fire may have sustained thermal, water, or physical damage during the fire incident and may ignite later.

2. Developing strategies and ordinances for safe charging is the most important mitigation. While FDNY personnel shared information about various devices that caught fire or exploded during normal use, the majority of incidents involved batteries being recharged. Fires during recharging have occurred in single-family dwellings, multi-family apartment complexes, and a multitude of different types of commercial occupancies—often where dozens of batteries are being recharged simultaneously in storefronts or food delivery hubs. The FDNY mentioned the recent legislation in NYC that significantly regulates battery charging in commercial occupancies.

3. Black market and grey market replacement and refurbished batteries present the gravest danger. Many of the presentations at the symposium revolved around replacement batteries and battery-powered devices sourced from overseas. Even more worrisome are DIY refurbishments where less-than-scrupulous vendors procure dead batteries, take the individual cells out of batteries, and reuse, repackage, and resell them to unsuspecting consumers. FDNY and UL personnel also shared that a growing number of battery chargers and other devices they confiscated bore counterfeit UL Listing trademarks, which are being sold in local and online retailers.

The speakers also shared a number of success stories and emerging best practices that communities across the country can and should begin to adopt now to mitigate the potential for future losses and future crises.

• Improving laws and ordinances. Some communities are beginning to adopt legislation and regulations to address the various risks associated with these types of incidents. Those same communities—NYC being an archetype—are also doing the associated compliance inspections and code enforcement activities to ensure these new regulations are being complied with. However, given the patchwork legal fabric of our country, regulatory advancements in NYC, for example, do not necessarily improve the situation in other major cities, much less small towns. That said, other cities can and do borrow and adapt model legislation from other communities to expedite their own development.
• Improving products to mitigate, suppress, and/or contain fires. Part of the problem is how quickly new battery-powered devices and threats are emerging in the marketplace. Thankfully, we’re now also starting to see rapid growth in the products and technology to address and prevent these types of fires. There were two types of products discussed at the workshop that stood out. CellBlock is a novel type of hazardous materials inert media that can be used to safely pack damaged batteries for storage. CellBlock also makes a range of pouches infused with the CellBlock chemicals that are used on airplanes and other enclosed environments to contain mobile devices that are failing. The other product was non-combustible battery charging cabinets that are designed to contain and limit the chain reaction of failures if a battery begins to fail while charging. It is worth noting that these differ significantly from “flammable cabinets” that are required for storing flammable liquids. The FDNY noted that several of these cabinets have been given a “Letter of Non-Objection” by the City of New York, which is their de facto stamp of approval.
• Emerging best practices in how to mitigate, extinguish, and remediate battery fires. The threat posed by battery fires has so far outpaced our ability to address them. In the absence of mature, science-based, universally adopted practices, first responders and remediation practitioners are relying upon their legacy practices and procedures, word-of-mouth conjecture, and a fair bit of ad-hoc experimentation to figure out how to address these atypical incidents. As a result, sometimes these practices end up prolonging or making the incident worse. This should be a concern for insurers. Current practices call for spraying high volumes of water for potentially hours to “drown” a fire—most often seen with electric vehicle fires—yet doing so often exacerbates the environmental contamination that may need to be remediated. Firefighting gear that is exposed to these types of fires may be permanently contaminated and require replacement, which may expand the cost of claims. However, progress is being made with workshops such as this one and groups like the non-governmental private company, Energy Security Agency, which provides training to first responders and towing professionals, destructive testing of battery-powered devices to learn from how different batteries fail, and a free 24/7 emergency advice line that first responders can call for guidance.

While there may not be a whole lot of mature science about how to mitigate these risks, the industry is rapidly trying to fill in the knowledge gaps and increase awareness to reduce the impact of these incidents. Hopefully, we will see this increased knowledge also reduce the financial loss associated with these types of claims. This is very much a topic that insurers should keep on their radar—even if they have not yet had a loss—because the prevalence of these types of devices is growing every day. AAIS is keeping our thumb on this emerging peril. Reach out to Dr. Matt Hinds-Aldrich to learn more.

The post Redefining Mobility & Risks of Battery Fires: Findings from an FDNY Symposium first appeared on AAIS.

“I’ve been getting out of the house more than ever with this new e-bike, have you considered getting one?”  

“Now that my solar array is complete, and I’ve connected the new 3000-watt home battery backup, I’m ready to go off-grid.”

The adage “home is where the heart is” speaks to our homes’ role in our lives. They are not simply our biggest investment, they are not simply an assembly of materials arranged in a shelter; a home is where our lives happen, where the people we care for coalesce. Increasingly, our homes are also where we store, charge, and use the multitude of battery-powered devices that we rely on for our work, our chores, and our leisure. A decade ago, the battery industry estimated that a typical household of two would have 20-40 (traditional removable) battery-powered devices. With the vast expansion and enhancements in battery technology, this number has grown exponentially. Nearly every household device now has a mass-market battery-powered version, and the remaining devices can typically be powered through large solar arrays and residential-scale energy storage systems.

With the rapid proliferation of battery-powered devices in homes (and businesses), we are hearing more frequently about the fire risks associated with these devices. Fires in modern battery-powered devices tend to be quite spectacular and cause considerable damage. The primary reason for this extreme fire behavior is Thermal Runaway – “a phenomenon in which the lithium-ion cell enters an uncontrollable, self-heating state. Thermal runaway can result in extremely high temperatures, violent cell venting, smoke, and fire.” (Source: UL Electrochemical Safety Research Institute). When confined inside a house, the thermal runaway from a small device can quickly transition to a fully involved structure fire. For NBC’s Today Show, UL conducted a full-scale demonstration of an e-scooter fire due to overcharging in a living room, dramatically demonstrating how quickly it can destroy a house.

Insurers have been working to understand this growing exposure. What the industry is learning is this exposure is not a narrow issue confined to one type of device or failure mechanism. The problem is multifaceted and complex, and this type of exposure is present in most homes (and businesses). But there are some common considerations and factors that increase the risk:

• Physical Damage or Destruction of the Battery – Many battery-powered devices are intended for hard work and rough play and consequently may crash, be stepped on, dropped from a height, pierced, submerged in water, or otherwise abused. Doing so can damage the battery components and disable safety features leading to overheating, short-circuits, and worse yet, thermal runaway.
• Resold or Refurbished Battery Components – The concern here is about used battery packs being resold from consumer to consumer when the provenance of the battery (and any potential damage, misuse, submersions, etc.) is unknown. This is even more problematic when advanced DIYers or unlicensed persons may have attempted to refurbish or modify battery components themselves. While there is a mature industry that tests, refurbishes, and resells used consumer electronic devices, the battery components themselves are best purchased new from a reputable source.
• Long-term and Unmonitored Recharging – Perhaps the most significant feature of any battery system is the ability to stop charging when it reaches its capacity. This technology has become so successful that we often put our devices on the charger and leave them there, figuring the device(s) are smart enough to shut themselves off when it is complete. This habit can result in fires when devices or battery packs are left on the charger for hours or days after they have fully recharged.
• Recharging Devices in Means of Egress – Very often the question about battery safety is more of a question of location—where is the battery being recharged? Many of the fatal fires associated with batteries have occurred when occupants—particularly in multi-story apartment buildings—have left micro-mobility devices (e-bikes, hoverboards, etc.) charging in hallways, stairwells, and doorways. If the device catches on fire it can block the primary means of escape for the residents, trapping them in the building or in their apartment.
• Batteries Inappropriately Disposed of in the Waste Stream – While typically less of a concern for traditional P&C carriers, another major fire source are batteries carelessly disposed of in residential trash waste streams. When compacted in refuse trucks or dumped into waste transfer stations, the residual “stranded energy” still contained within the batteries can start fires.

Communities across the country are working to reduce the prevalence of fires from battery-powered devices. New York City, which has seen a significant number of battery fires, instituted a series of regulations to reduce fires by prohibiting the sale of batteries that are not UL-approved and severely restricting locations where batteries can be refurbished or stored in large quantities (such as bike courier hubs), among other things. Other communities are following suit in passing regulations, increasing public awareness of battery fire safety, and developing effective strategies for suppressing and containing battery-caused fires.

But the challenge remains that many unapproved and unregulated devices are readily available for sale through online marketplaces, making it easy to sidestep local enforcement efforts. More places are providing safe battery disposal sites including big box stores and waste and recycling vendors (for the purpose of reducing the fire risk to their vehicles and facilities as much as for environmental stewardship), though many of these disposal sites explicitly prohibit disposing of batteries that have expanded, deformed, or are otherwise at risk of imminent catastrophic failure.

As the battery technology industry becomes more mature and more heavily regulated, we can expect to see more intrinsic safety measures built in and better ways to prevent the catastrophic failure of batteries. However, as the industry matures, it is also expanding exponentially with countless new technologies being introduced and novel energy storage devices being prototyped every month. So, the exposure is only anticipated to grow accordingly. Insurers need to have a seat at the table when the dinner conversation turns to fire risks from batteries. Because a modern home really is where the battery is.

The post Home Is Where the Battery Is first appeared on AAIS.

Creation of Hurricane Models

According to Fanoe, hurricane models are generally a merge of meteorological expertise, engineering expertise, and insurance expertise. “Most models will start with the [meteorological] portion of the model, which is projecting out potential hurricanes, determining the frequency with which they’ll occur, and the path they’ll take if they do occur,” said Fanoe. “Then, we project the path [a hurricane] will take, including where it will make landfall, what will happen once it makes landfall, and how much the wind speed will slow down.” Then, there is the wind field assessment, which determines what areas are being affected and by how much wind. “This allows you to map out all of the homes and buildings that are impacted by wind and how much wind there is,” said Fanoe. “Wind fields feed directly into the [engineering] component of the model.” The combination of the meteorological and engineering components produces an estimate of how much damage is done to every home within the wind field of the model, which leads to insurance expertise. “This component looks at what homes are written by an insurer, what the limits are on those homes, and what the deductibles are on those homes,” Fanoe explained. “What the overall limits are is how reinsurance comes into play. That is used to project the loss that a particular insurance company is going to take related to that storm.” While this is a very simplified take on how hurricane models work, it is important to understand that since they utilize meteorological, engineering, and insurance expertise, it takes multiple different experts to create them. There also can be a lot of different versions of these models. That being said, almost every model will have a long-term and short-term version of that model. “The only difference between the long and short-term versions of the model is in the frequency assessment of the hazard model,” Fanoe shared. “A long-term model will use usually 100-year or more averages of the actual landfall rates of hurricanes in the U.S. to project that frequency. A short-term model will be based on shorter-term averages.”

How Insurance Companies Use Hurricane Models

Since hurricane models are very complicated, Darby revealed that the Maine Bureau of Insurance requests information on each CAT model in the filings as well as the version number that they’re using for their CAT load. Then, they look down to the Florida Commission of Hurricanes to see if they’ve approved that model. If Florida has approved it for use in Florida, then Maine allows it for use in their rate filings. “We follow this process because I do not have the expertise to review the CAT model as it is,” Darby explained. “That being said, we do have 3,500 miles of coastline here in Maine, and even though our hurricanes are usually category one or two, we’re still concerned about having a large coastline in the future.” With this in mind, it is important that insurance companies are building in enough load in their rates so that they maintain solvency.

Education & Regulation of Hurricane Models

While some states, like Maine, do not have a coastline that is much impacted by severe hurricanes, Gupta believes it has become increasingly important for regulators to build knowledge and understanding of CAT models. “[Regulators] are key stakeholders when it comes to managing the insurance marketplace within their states,” she said. “They need to ensure that their markets are healthy and solvent with increased catastrophic and climate risk and that there is availability and affordability of insurance.” Historically, the knowledge and understanding of CAT models have been limited in the regulatory community for many reasons. “One is simply the lack of access to model documentation due to the proprietary nature of these commercial CAT models,” Gupta shared. “So, the documentation or the knowledge doesn’t exist in a public state that is readily available for regulators.” The other, she explained, is the fact that these are complex models. “There are not enough standard resources that exist within individual state DOIs and within the NAIC around these CAT models,” Gupta stated. She is currently trying to change this with her work at the NAIC. Gupta’s role focuses on bridging the educational gap and building knowledge within the regulatory community. “We have actually developed a foundational course around these CAT models that is peril agnostic,” she revealed. “The course focuses on different components of the CAT model framework, the input-output, and the application of CAT models.” The NAIC plans to expand this training program to specific perils, which will go more in-depth depending upon individual states’ needs.

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Linda Jancik
Product Manager – Personal Lines (AAIS)
lindaj@aaisonline.com

Greg Fanoe, FCAS, MAAA
Director & Consulting Actuary (Davies)
gfanoe@merlinosinc.com

Sandra Darby
Property & Casualty Division Actuary (Maine Bureau of Insurance)
sandra.c.darby@maine.gov

Shaveta Gupta, CPCU, ARM, ARe, CCM, CCRMP
Catastrophe Risk & Modeling Advisor (NAIC)
sgupta3@naic.org

The post Webinar: Hurricane Models – Creation, Usage, and Regulation first appeared on AAIS.

Overview of the Regulation

In October 2022, the California DOI passed the regulation requiring an insurer to offer specific mitigation factors. Westcott explained that the determination for whether this applied to consumers’ currently filed rate was whether they used the wildfire risk model, or the rating plan segmented a policyholder’s rate based upon the policyholder’s wildfire risk. “The regulation addresses two types of mandatory mitigation factors as well as the community level and property level mandatory mitigation factors,” Westcott described. “The property level factors cover mitigation measures addressing both the immediate surroundings at the structure, often referred to as ‘defensible space,’ as well as the buildings hardening measures performed on the structure itself.” The regulation further identifies some optional factors relating to wildfire loss that an insurer may incorporate into the rating plans as long as the resulting rate is not excessive, inadequate, or unfairly discriminatory. Westcott shared that throughout the regulation, there are administrative requirements an insurer must follow. “Many of the requirements are around transparency and providing information regarding the mitigation credits to your policyholders,” she said. In addition, each company is still required to make a filing even if your advisory organization has filed with the department.

Wildfire Mitigation in AAIS Manual

Linda Jancik explained that this regulation affected the homeowners by peril (HOBP) and homeowners by composite (HOC) programs at AAIS the most. Filings* were also done for agricultural output, commercial output, and inland marine guide-motor truck cargo. Wildfire risk mitigation credits are available in both California HOBP and HOC programs in the AAIS rule manual as separate rules. “The reason [for this] is that there are different ways of premium determination for these two programs,” Jancik explained. “Because in HOBP, wildfire can be isolated, whereas in HOC, their combined loss costs do not allow it to split up into individual programs.”

There are three categories of wildfire risk mitigation credits available: community coordination, property hardening, and defensible space. “Whereas the community coordination credit applies to the community you live in, property hardening measures, as well as defensible space measures, can be influenced by the policyholder,” said Jancik. “So, we can’t suppress our way out of wildfire.” She believes that communities that are coordinated, collaborative, and consistent in their wildfire mitigation efforts are likely to have lower losses and better outcomes. Property hardening measures relate to all building characteristics that help reduce wildfire risk. The risk of wildfire damage to buildings is also dependent on preventative measures such as ensuring that the area surrounding the building is clear of excessive flammable material and debris.

Rating Impact

For the community coordination credit, AAIS is proposing a 4% wildfire credit for being recognized in a FirewiseUSA site in good standing. “This 4% is larger than most of our other credits,” Mike Payne relayed. “We wanted to recognize that they have a lot of activities going on; they’re really committed. So, it was a little bit more robust.” In a California fire risk reduction community, AAIS is proposing a 1% credit. It’s a relatively new program, according to Payne, which is why it is different from the FirewiseUSA sites. “But these two pieces are technically mutually exclusive,” he added. “So, you could be in one or both of those types of communities [and] your maximum wildfire credit for community coordination would be 5%.” AAIS is proposing a 1% credit for each of the property hardening credit type activities (Class-A fire-rated roof, enclosed eaves, etc.) “It might seem small, but we really wanted to try and emphasize the fact that when you do more of these, they add up and you’ll get more of a benefit,” Payne explained. The same applies for the defensible space credit. “Again, assuming all five activities are met, you would get the 5% compounding impact and you add those together to get a total of 10% for maximum wildfire credit for defensible spaces,” said Payne. “If you add up those three components together, we are proposing a maximum of a 25% credit to the wildfire portion of the loss costs.”

Rethinking Consumer Notices & the AAIS Consumer Notice Tool

When discussing wildfire mitigation, one of the key factors that comes up is how to incentivize homeowners to take action. “The regulation that’s been put forth by CDI goes a long way to start driving change and homeowner behavior,” said Matt Hinds-Aldrich. “But we still need to instill a sense of urgency. [AAIS] discovered the importance of the consumer notice.” Because this regulation puts a lot of focus on actuarial analyses and being compliant with the law, the consumer notice tends to become an afterthought. “[AAIS] started realizing that there’s a real missed opportunity here,” Hinds-Aldrich claimed. “So, we spent time developing a consumer notice model.” In doing so, AAIS identified three key issues that needed to be addressed: comprehension, accessibility, and motivation aspects.

When creating the consumer notice sample, AAIS believed that if it was kept short, succinct, and relevant, homeowners would take full advantage of it. Information can either be put in manually through drop-down menus or in an automated fashion at scale. “Whatever the reading is, or variables that are selected, [the form] will automate all of the remaining information,” Hinds-Aldrich explained. The other component worth noting is that this form is entirely customizable by any AAIS member. “Everything can be changed from the colors to the verbiage,” Hinds-Aldrich shared. “[We] recognize that carriers are going to have to make their own choices and may have different variations when they do their own filing.” AAIS has also created a separate version of the consumer notice tool that allows companies that use catastrophic wildfire risk models to disclose the model that was used and how it operates.

If you would like to view the presentation again in its entirety, please click the video above.

Questions? Please don’t hesitate to reach out to any of the featured speakers through the contact information below.

Linda Jancik
Product Manager – Personal Lines
lindaj@aaisonline.com

Mike Payne, FCAS, MAAA
Chief Pricing Actuary
michaelpa@aaisonline.com

Matt Hinds-Aldrich, PhD
Senior Risk Strategy Lead
matth@aaisonline.com

*Note that filings for these programs have not yet been approved.

The post Webinar: Making Wildfire Mitigation Meaningful: Addressing California’s Mandatory Wildfire Mitigation Credits Regulation first appeared on AAIS.